South County Hospital remains only independent facility

January 18, 2013

SOUTH KINGSTOWN â South County Hospital is now the only independent hospital in Rhode Island, given the recent purchase of the Westerly Hospital by Lawrence and Memorial and assuming that Landmark Hospital in Woonsocket is purchased by its latest bidder, Prime Health.
In a rapidly changing healthcare environment, Lou Giancola, president and CEO of South County Hospital, would like to make sure the hospital remains independent.

At a meeting Monday with the South Kingstown Town Council and local legislators Teresa Tanzi, Susan Sosnowski and Dennis Algiere, Giancola expressed concern with the âtremendous amount of consolidationâ in the healthcare industry not only seen in Rhode Island but across the country.
âOne of the big issues weâre going to face is whether or not we can continue to remain independent or whether or not we need to partner and what kind of partnership makes sense for us to continue to support the residents of this community,â Giancola said.
He said the hospitalâs board of trustees is working to evaluate what the best approach is not only for the hospital, but also for the people of South County.
âOur major focus has to be the health and welfare and the maintenance of heath of the residents of the community,â Giancola said. âWeâre taking a very hard look internally at how well weâre doing and how many people from the community rely on us for services versus how many leave the community.â
The hospital was rated number one in patient satisfaction for the past three years and has also been able to achieve a positive bottom line, regarding their finances over the same period of time.
However, recent changes to Medicare will hurt the hospital, creating a gap between the cost of providing care and what the hospital is paid for providing said care.
Giancola cited four priorities for the hospital this year, and in coming years, to make sure the hospital is able to remain independent.
One of which is the disproportionate share program, which is a license fee, or tax, on the hospitalâs net revenue. Giancola said the hospital would be taxed more âto the extent we do better as a hospital and more people use us.â
According to Giancola, last year the hospital paid 4.5 percent of its net revenue and received payments back of $2 million less than the payments it had made. A larger portion of the money is given to hospitals that provide uncompensated care, which is only approximately 3.5 percent in South County.
Given that this âtaxâ was affecting the hospital negatively, a bill was passed last legislative session for this fiscal year allowing hospitals in Washington County to pay only $1 million, about 40 percent of the license fee that other hospitals in the state are feeling.
Giancola said without the legislation, the hospital would have had to pay about $3 million this year.
âWeâre very concerned that that program continue,â Giancola said. âWe need to continue to be net payers of $1 million. We want to be good citizens and we think paying our fair share is reasonable, but $2 million was a burden; $1 million is reasonable in the interest of not placing another community hospital in financial distress. This program could easily hurt us very badly if it doesnât continue.â
Giancola also cited comprehensive health planning, amendments to the healthcare conversion act (or Hospital Conversion Act) and transparency in insurance payment rates, as issues of interest to the hospital.
âWe believe that the state would really be enhanced if we had a process for planning the resources necessary to provide excellent care to all residents of the state,â Giancola said. âThereâs no health plan against which to evaluate these capital expenditures that looks at needs and what kinds of services make a difference, itâs real opportunity to do effective planning.â
In terms of the healthcare conversion act, Giancola said the current structure awards a hospital to the highest bidder should it go into receivership and prompt a sale, as in the case of the Westerly Hospital.
âIf the resources were available, I think we could have put together a really good system between the two hospitals for Washington County,â Giancola said of the sale of the Westerly Hospital to New London, Conn.,-based Lawrence and Memorial.
Ultimately, the town council and local legislators recognize the importance of South County Hospital as an economic engine for South Kingstown.
Council members said they would draft a resolution to pass on to legislators to assist the hospital further its interests.
âWe understand clearly the economic interest the hospital provides,â said Dennis Algiere, state senator for District 38. âWeâre going to do everything we can to work with you and other community hospitals. Weâre looking out for not only this hospital, but healthcare in Rhode Island.â